Motorola announces shareholders meeting to approve reverse split

Today, Motorola announced that it would be holding a special meeting for all stockholders on November 29. The company is seeking approval of a reverse split buyback of common stock; ratios being reported are anywhere from 1-for-3 to 1-for-7.

“If approved by stockholders, the reverse split is expected to be implemented on Motorola Solutions common stock in the first quarter 2011, immediately following Motorola’s previously announced separation into two, independent public companies,” reads the press release. “Motorola’s Board of Directors believes that implementing a reverse stock split on Motorola Solutions outstanding shares is likely to improve the marketability and liquidity of Motorola Solutions common stock.”

An approved, reverse stock-split will obviously not affect the ownership stake any one shareholder has in the company, but the stock price will increase by a factor of 3 to 7 (depending on which split ratio is approved). The release also noted that investors who end up with a fraction of a share in the company — as a result of the reverse split — will be given cash for the partial share.

MOT have capably proven themselves with Android, and are highly deserving of this rise in share price. AMEN!

elijahblake

wish i would have bought some stock a while back when it was low… :(

congrats MOTO!

Android

Exactly. After this split (hopefully the 1-7 split), i’m buying a yacht! If it’s the 1-3, i’ll settle for a paddleboat. Either way, I win!

informed

It’s a reverse split. The price will go up by 7 times, and your share count will go down by 7 times. It gives the stock a lot more room to go down. Better sell now.

Mohammad

motorola. life is well.

debbie barnes

in english please

Andrew Munchbach

If you have 3 shares of Motorola that are valued at $10 per share, they are going to to take two away and make your one share worth $30.

CGH

Motorola. I will buy your shares!
When i reach the legal age in my country!

http://youtube.com/ai4281 ai4281

Isn’t this a bad sign? From what I understand, companies usually implement reverse stock split to make their shares LOOK more valuable, especially when they’re in trouble.

For investors, this doesn’t change anything right away because it just means they get less shares but overall value will be the same. Of course, there is a history of stocks going down after a reverse split, so it will be bad for investors in the long run.

I am not an economist, so I might be wrong. Feel free to correct me :)

Android

Trust me, this is a good sign of success. Android Forever!

ljp

You are not wrong. They are doing all they can to launch the Motorola mobility half and make it appear as an instant winner.

The Masked One

Largely this is a non-event. This reverse split seems to be timed to occur after Motorola splits into two companies (Motorola Solutions and Motorola Mobility – really creative names, guys, really, how much time did you invest in those), and it only changes the one company’s stock.

I generally don’t care for reverse splits because a) they often send a bad message (our stock price is too low and we’re going to be delisted!) or b) they create a problem for the investor.

The former may be an issue for the company – it depends on how much of the value of the pre-split Motorola gets assigned to Motorola Solutions when they split. If the value remaining in Motorola Solutions is too low, and correspondingly the stock price falls too low, the NYSE could delist them. That would be an issue, but the reverse split should cover that.

But my real problem with these reverse splits is that I don’t like dealing with those remainder shares turned into cash at today’s price. I know, it’s only going to be 2 or 6 maximum shares (given the current projected split rate), but it creates a tax accounting nuisance – which shares were sold? what was their cost basis? how long did I hold that? is that capital gain/loss or short-term gain/loss? Can TurboTax handle all this? What time does the bar open? Is it April 14th yet?

Making this all worse is that the Motorola split is set for sometime in 1Q2011, which means that by the time 1Q2012 rolls around I’ll have forgotten that any of this happened and I’ll just get frustrated again!

One way to resolve this is to ensure that your account contains a multiple of 3, 4, 5, 6, or 7, which looking at a LCM analysis results in a # of shares that’s a multiple of 420 (2*2*3*5*7). That kinda seems unlikely, now doesn’t it.

Jarrett

I’m buying MOT stock now. Guaranteed 3x-7x increase. Sweet!

Marc

There is not guaranteed 3x-7x increase. Your total dollar amount will be the same. As Andrew said eariler

If you have 3 shares worth 10 dollars you have $30 invested in this company.

If they do a reverse split for a 1-for-3, you will have 1 share worth $30, therefore you still have $30 invested in the company. Nothing gained nor lost.

JayK

Reverse splits are almost always a sign of failure because it is only done when the company’s stock price has no realistic chance of increasing beyond the penny stock stigma. MOT’s stock price isn’t that low, but once they separate into two companies, their stock prices will be under 5 bucks, which is not really desirable.

Pal

Reverse split is a very good step if the company doing well. Most company which normally try to do reverse split are company which dont have much future or good products. In case of Motorola Solutions, they have good product portfolio and this share is definitely a BUY BUY.